<PAGE>
As Filed with the Securities and Exchange Commission on March 11, 1999
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SUITE101.COM, INC.
(Exact Name of Registrant as specified in its Charter)
DELAWARE 33-0464753
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
1122 MAINLAND STREET, SUITE 390, VANCOUVER, BRITISH COLUMBIA, CANADA V6B 5L1
(604) 682-1400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
1998 STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
(Full Title of Plan)
PETER L. BRADSHAW, PRESIDENT
SUITE101.COM, INC.
1122 MAINLAND STREET, SUITE 390, VANCOUVER, BRITISH COLUMBIA V6B 5L1
(604) 682-1400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With a Copy to:
WILLIAM S. CLARKE, ESQUIRE
WILLIAM S. CLARKE, P.A.
457 NORTH HARRISON STREET, SUITE 103, PRINCETON, NEW JERSEY 08540
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
TITLE OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001
par value 866,890 $3.56(1) $3,086,128 $858.00
- ----------------------------------------------------------------------------------------
Common Stock, $.001
par value 333,110 $1.50(2) $499,665 $139.00
- ----------------------------------------------------------------------------------------
Total $997.00
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the Registration Fee in
accordance with Rules 457(c) and 457(h) under the Securities Act of 1933, as
amended, based upon the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market on March 8, 1999.
(2) Pursuant to Rule 457(h), based on the price at which such options may be
exercised.
<PAGE>
EXPLANATORY NOTE
This Registration Statement on Form S-8 relates to the registration of
1,200,000 shares of common stock issued or issuable on exercise of options
granted and to be granted under the 1998 Stock Incentive Plan (the "Plan") to
selected employees, non-employee members of the Board of Directors, and
consultants or other independent advisors who provide services to Suite101.com,
Inc., a Delaware corporation (the "Company"). The exercise of options granted
and that may be granted under the Plan is subject to the approval of the
adoption of the Plan by the stockholders of the Company.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION
The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to plan participants as specified in Rule 428(b)(1)
and, in accordance with the introductory Note to Part I, are not filed with
the Commission as part of this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The Company will furnish without charge to each person to whom a Section
10(a) Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the documents incorporated herein by
reference in Item 3 of Part II of this Registration Statement. Requests
should be addressed to Suite101.com, Inc., 1122 Mainland Street, Suite 390,
Vancouver, British Columbia V6B 5L1.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Incorporated by reference in this Registration Statement are the
following documents and information previously filed with the Securities and
Exchange Commission (the "Commission"), filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (File No. 0-25136):
1. The Company's Annual Report on form 10-KSB for the year
ended December 31, 1997.
2. The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998.
3. The Current Reports of the Company on Form 8-K dated
November 9, 1998, December 10, 1998 and January 25, 1999.
<PAGE>
4. All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered
have been sold or which de-registers all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent
that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute
a part of this Registration Statement except as so modified or
replaced.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock, par value $.001 per share, is registered
under Section 12 of the Securities Exchange Act of 1934, as amended.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article V, Section 5.1 of the Company's By-Laws provide as follows:
Section 5.1. (a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a
person of whom he or she is the legal representative is or was a director,
officer, employee or agent of the Corporation, or is serving at the request
of the Corporation, as a director, officer or employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis
of such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless
by the corporation to the fullest extent authorized by the Delaware General
- 2 -
<PAGE>
Corporation Law as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment) and in the
manner provided in the Certificate of Incorporation of the Corporation and as
otherwise permitted by the Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law provides for
indemnification of present and former officers, directors, employees and
agents.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Options to purchase an aggregate of 333,110 shares of Common Stock
granted to 252 persons are outstanding under the 1998 Stock Incentive Plan
(the "Plan"). Such options are held by the holders of options granted by
i5ive communications, Inc. ("i5ive"), a predecessor of the Company acquired
on December 10, 1998, in reliance upon the exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), afforded
by Rule 701 thereunder. The options granted by i5ive were assumed by the
Company effective December 10, 1998. The options granted are subject to
stockholder approval of the adoption of the Plan, a vesting a period of up to
two (2) years with the first vesting to occur on December 4, 1999 and are
non-transferrable. Each optionee must agree that, unless registered under the
Act, the shares issuable on exercise of an option will bear an appropriate
restrictive legend under the Act and stop transfer instructions will be
placed against the transfer of the shares.
ITEM 8 EXHIBITS
The information required by this Item 8 is set forth in the Index to
Exhibits accompanying this Registration Statement and is incorporated herein
by reference.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereunder undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include (i)
any prospectus required by Section 10(a)(3) of the Securities Act, and to
include (ii) any additional or changed material
- 3 -
<PAGE>
information with respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such information in
the Registration Statement; provided, however, that paragraph (1) does not
apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment to that
paragraph is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by any director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
- 4 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of
Vancouver, Province of British Columbia, Canada on the 11th day of March, 1999.
SUITE101.COM, INC.
BY: /s/ PETER L. BRADSHAW
-----------------------------------
Peter L. Bradshaw, President and
Chief Executive Officer
<PAGE>
SUITE101.COM, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors
and officers of Suite101.com, Inc., a Delaware corporation, which is filing a
Registration Statement on Form S-8 with the Securities and Exchange
Commission, Washington, D.C. 20549 under the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), hereby constitutes and appoints
Peter L. Bradshaw and Julie M. Bradshaw, and each of them, the individual's
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for the person and in his name, place and stead, in any
and all capacities, to sign such Registration Statement and any or all
amendments, including post-effective amendments, to the Registration
Statement, including a Prospectus or an amended Prospectus therein and any
registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act, and all other
documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact as agents or any of
them, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ PETER L. BRADSHAW Director, President and Chief Executive March 11, 1999
- ------------------------ Officer (Principal Executive Officer)
Peter L. Bradshaw (Principal Accounting and Financial Officer)
/s/ JULIE M. BRADSHAW Director March 11, 1999
- ------------------------
Julie M. Bradshaw
/s/ SUNNY H. HIRAI Director March 11, 1999
- ------------------------
Sunny H. Hirai
Director March , 1999
- ------------------------
Mitch Blumberg
</TABLE>
<PAGE>
SUITE101.COM, INC.
REGISTRATION STATEMENT ON FORM S-8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- ---------------- ------------------------------------------------------------
<S> <C>
4.1 1998 Stock Incentive Plan
5.1 Opinion of William S. Clarke, P.A.
23.1 Consent of Raimondo Petit Group
23.2 Consent of William S. Clarke, P.A. (included in Exhibit 5.1).
</TABLE>
<PAGE>
SUITE101.COM, INC.
1998 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1998 Stock Incentive Plan is intended to promote the interests of
Suite101.com, Inc., a Delaware corporation, by providing eligible persons with
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation. Capitalized terms shall have the meanings
assigned to such terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into five separate equity programs:
(i) the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted
options to purchase shares of Common Stock,
(ii) the Salary Investment Option Grant Program under which eligible
employees may elect to have a portion of their base salary invested each
year in special options,
(iii) the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or Subsidiary),
(iv) the Automatic Option Grant Program under which eligible non-employee
Board members shall automatically receive options at periodic intervals to
purchase shares of Common Stock, and
<PAGE>
(v) the Director Fee Option Grant Program under which non-employee Board
members may elect to have all or any portion of any annual retainer fee
otherwise payable in cash applied to special options.
B. The provisions of Articles One and Seven shall apply to all equity programs
under the Plan and shall govern the interests of all persons under the
Plan.
III. ADMINISTRATION OF THE PLAN
The following provisions shall govern the administration of the Plan:
(i) The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to
Section 16 Insiders but may delegate such authority in whole or in part to
the Primary Committee.
(ii) Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board's discretion, be vested
in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer those programs with respect to all such
persons.
(iii) The Primary Committee shall have the sole and exclusive authority
to determine which Section 16 Insiders and other highly compensated
Employees shall be eligible for participation in the Salary Investment
Option Grant Program for one or more calendar years. However, all option
grants under the Salary Investment Option Grant Program shall be made in
accordance with the express terms of that program, and the Primary
Committee shall not exercise any discretionary functions with respect to
the option grants made under that program.
(iv) Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms
of those programs.
B. Each Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full power and authority subject to the
provisions of the Plan:
(i) to establish such rules as it may deem appropriate for proper
administration of the Plan, to make all factual determinations, to construe
and interpret the provisions of the Plan and the awards thereunder and to
resolve any and all ambiguities thereunder;
(ii) to determine, with respect to awards made under the Discretionary
Option Grant and Stock Issuance Programs, which eligible persons are to
receive such awards, the time or times when such awards are to be made, the
number of shares to be covered by each such award, the vesting schedule (if
any) applicable to the
<PAGE>
award, the status of a granted option as either an Incentive Option or a
Non-Statutory Option and the maximum term for which the option is to
remain outstanding;
(iii) to amend, modify or cancel any outstanding award with the consent
of the holder or accelerate the vesting of such award; and
(iv) to take such other discretionary actions as permitted pursuant to
the terms of the applicable program.
Decisions of each Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties.
C. Members of the Primary Committee or any Secondary Committee shall serve for
such period of time as the Board may determine and may be removed by the
Board at any time. The Board may also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.
D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as
Board members for their service on such committee. No member of the
Primary Committee or the Secondary Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any options or
stock issuances under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant and
Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).
B. Only Employees who are Section 16 Insiders or other highly compensated
individuals shall be eligible to participate in the Salary Investment
Option Grant Program.
<PAGE>
C. Only non-employee Board members shall be eligible to participate in the
Automatic Option Grant and Director Fee Option Grant Programs.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common
Stock initially reserved for issuance over the term of the Plan shall not
exceed 1,200,000 shares.
B. No one person participating in the Plan may receive options, separately
exercisable stock appreciation rights and direct stock issuances for more
than 150,000 shares of Common Stock in the aggregate per calendar year,
beginning with the 1998 calendar year.
C. Shares of Common Stock subject to outstanding options shall be available
for subsequent issuance under the Plan to the extent those options expire,
terminate or are cancelled for any reason prior to exercise in full.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise or issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be
added back to the number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for reissuance through
one or more subsequent options or direct stock issuances under the Plan.
However, should the exercise price of an option under the Plan be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable
under the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an option or
the vesting of a stock issuance under the Plan, then the number of shares
of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised or which vest
under the stock issuance, and not by the net number of shares of Common
Stock issued to the holder of such option or stock issuance. Shares of
Common Stock underlying one or more stock appreciation rights exercised
under the Plan shall not be available for subsequent issuance.
D. If any change is made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares
or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall
be made to (i) the maximum number and/or class of securities issuable under
the Plan, (ii) the number and/or class of securities for which any one
person may be granted options, separately exercisable stock appreciation
rights and direct stock issuances under the Plan per calendar year, (iii)
the number and/or class of securities for
<PAGE>
which grants are subsequently to be made under the Automatic Option Grant
Program to new and continuing non-employee Board members, and (iv) the
number and/or class of securities and the exercise price per share in
effect under each outstanding option under the Plan. Such adjustments
to the outstanding options are to be effected in a manner which shall
preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form approved
by the Plan Administrator; provided, however, that each such document shall
comply with the terms specified below. Each document evidencing an Incentive
Option shall, in addition, be subject to the provisions of the Plan applicable
to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan Administrator
at the time of the option grant.
2. The exercise price shall become immediately due upon exercise of the
option and shall, subject to the provisions of Section II of Article Seven
and the documents evidencing the option, be payable in cash or check made
payable to the Corporation. The exercise price may also be paid as
follows:
(i) shares of Common Stock held for the requisite period necessary
to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise
Date, or
(ii) to the extent the option is exercised for vested shares, through
a special sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable instructions to (a) a
Corporation approved brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise
and (b) the Corporation to deliver
<PAGE>
the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at such
time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of
ten (10) years measured from the option grant date.
C. Cessation of Service.
1. The following provisions shall govern the exercise of any options
outstanding at the time of the Optionee's cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's cessation
of Service for any reason shall remain exercisable for such period of
time thereafter as shall be determined by the Plan Administrator and
set forth in the documents evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the Optionee at
the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding for any
vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of
Service, terminate and cease to be outstanding to the extent the
option is not otherwise at that time exercisable for vested shares.
(iv) Should the Optionee's Service be terminated for Misconduct or
should the Optionee engage in Misconduct while his or her options are
outstanding, then all such options shall terminate immediately and
cease to be outstanding.
<PAGE>
2. The Plan Administrator shall have complete discretion, exercisable
either at the time an option is granted or at any time while the option
remains outstanding:
(i) to extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service to such
period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the expiration of the option term, and/or
(ii) to permit the option to be exercised, during the applicable
post-Service exercise period, for one or more additional
installments in which the Optionee would have vested had the
Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no stockholder
rights with respect to the shares subject to the option until such person
shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid
per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the
document evidencing such repurchase right.
F. Limited Transferability of Options. During the lifetime of the Optionee,
Incentive Options shall be exercisable only by the Optionee and shall not
be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. Non-Statutory Options
shall be subject to the same restrictions, except that a Non-statutory
Option may, to the extent permitted by the Plan Administrator, be assigned
in whole or in part during the Optionee's lifetime to one or more members
of the Optionee's immediate family or to a trust established exclusively
for one or more such family members. The terms applicable to the assigned
portion shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents issued to
the assignee as the Plan Administrator may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Seven shall be applicable to Incentive Options. Options
which are specifically
<PAGE>
designated as Non-Statutory Options when issued under the Plan shall not be
subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Exercise Price. The exercise price per share shall not be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock
on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for
the first time become exercisable as Incentive Options during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options
which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such options as
Incentive Options shall be applied on the basis of the order in which
such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is granted
is a 10% Stockholder, then the exercise price per share shall not be less
than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Each option outstanding at the time of a Change in Control but not
otherwise fully-vested shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in
Control, become exercisable for all of the shares of Common Stock at the
time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, an outstanding
option shall not so accelerate if and to the extent: (i) such option is,
in connection with the Change in Control, assumed or otherwise continued in
full force and effect by the successor corporation (or parent thereof)
pursuant to the terms of the Change in Control, (ii) such option is
replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Change in Control on the
shares of Common Stock for which the option is not otherwise at that time
exercisable and provides for subsequent payout in accordance with the same
vesting schedule applicable to those option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant.
<PAGE>
B. All outstanding repurchase rights shall also terminate automatically, and
the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force and
effect pursuant to the terms of the Change in Control or (ii) such
accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Change in Control, all
outstanding options shall terminate and cease to be outstanding, except
to the extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the
terms of the Change in Control.
D. Each option which is assumed in connection with a Change in Control shall
be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities which would have been issuable
to the Optionee in consummation of such Change in Control had the option
been exercised immediately prior to such Change in Control. Appropriate
adjustments to reflect such Change in Control shall also be made to (i) the
exercise price payable per share under each outstanding option, provided
the aggregate exercise price payable for such securities shall remain the
same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number
and/or class of securities for which any one person may be granted options,
separately exercisable stock appreciation rights and direct stock issuances
under the Plan per calendar year.
E. The Plan Administrator may at any time provide that one or more options
will automatically accelerate in connection with a Change in Control,
whether or not those options are assumed or otherwise continued in full
force and effect pursuant to the terms of the Change in Control. Any such
option shall accordingly become exercisable, immediately prior to the
effective date of such Change in Control, for all of the shares of Common
Stock at the time subject to that option and may be exercised for any or
all of those shares as fully-vested shares of Common Stock. In addition,
the Plan Administrator may at any time provide that one or more of the
Corporation's repurchase rights shall not be assignable in connection with
such Change in Control and shall terminate upon the consummation of such
Change in Control.
F. The Plan Administrator may at any time provide that one or more options
will automatically accelerate upon an Involuntary Termination of the
Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of any Change in Control in which
those options do not otherwise accelerate. Any options so accelerated
shall remain exercisable for fully-vested shares until the earlier of (i)
the expiration the option term or (ii) the expiration of the one (1) year
period measured from the effective date of the Involuntary Termination. In
addition, the Plan Administrator may at any time
<PAGE>
provide that one or more of the Corporation's repurchase rights shall
immediately terminate upon such Involuntary Termination.
G. The Plan Administrator may at any time provide that one or more options
will automatically accelerate in connection with a Hostile Take-Over. Any
such option shall become exercisable, immediately prior to the effective
date of such Hostile Take-Over, for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall terminate automatically upon the consummation of
such Hostile Take-Over. Alternatively, the Plan Administrator may condition
such automatic acceleration and termination upon an Involuntary Termination
of the Optionee's Service within a designated period (not to exceed
eighteen (18) months) following the effective date of such Hostile Take-
Over. Each option so accelerated shall remain exercisable for fully-vested
shares until the expiration or sooner termination of the option term.
H. The portion of any Incentive Option accelerated in connection with a Change
in Control or Hostile Take Over shall remain exercisable as an Incentive
Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation
is exceeded, the accelerated portion of such option shall be exercisable as
a Non-Statutory Option under the Federal tax laws.
IV. STOCK APPRECIATION RIGHTS
The Plan Administrator may, subject to such conditions as it may determine,
grant to selected Optionees stock appreciation rights which will allow the
holders of those rights to elect between the exercise of the underlying option
for shares of Common Stock and the surrender of that option in exchange for a
distribution from the Corporation in an amount equal to the excess of (a) the
Option Surrender Value of the number of shares for which the option is
surrendered over (b) the aggregate exercise price payable for such shares. The
distribution may be made in shares of Common Stock valued at Fair Market Value
on the option surrender date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem appropriate.
<PAGE>
ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
- --------------------------------------------------------------------------------
I. OPTION GRANTS
The Primary Committee may implement the Salary Investment Option Grant
Program for one or more calendar years beginning after the Plan Effective
Date and select the Section 16 Insiders and other highly compensated
Employees eligible to participate in the Salary Investment Option Grant
Program for each such calendar year. Each selected individual who elects to
participate in the Salary Investment Option Grant Program must, prior to the
start of each calendar year of participation, file with the Plan
Administrator (or its designate) an irrevocable authorization directing the
Corporation to reduce his or her base salary for that calendar year by an
amount not less than Ten Thousand Dollars ($10,000.00) nor more than Fifty
Thousand Dollars ($50,000.00). The Primary Committee shall have complete
discretion to determine whether to approve the filed authorization in whole
or in part. To the extent the Primary Committee approves the authorization,
the individual who filed that authorization shall be granted an option under
the Salary Investment Grant Program on the first trading day in January for
the calendar year for which the salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however
that each such document shall comply with the terms specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be
made on the Exercise Date.
<PAGE>
B. Number of Option Shares. The number of shares of Common subject to the
option shall be determined pursuant to the following formula (rounded down
to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
B is the Fair Market Value per share of Common Stock on
the option grant date.
C. Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.
D. Cessation of Service. Each option outstanding at the time of the
Optionee's cessation of Service shall remain exercisable, for any or all of
the shares for which the option is exercisable at the time of such
cessation of Service, until the earlier of (i) the expiration of the option
term or (ii) the expiration of the three (3)-year period following the
Optionee's cessation of Service. To the extent the option is held by the
Optionee at the time of his or her death, the option may be exercised by
his or her Beneficiary. However, the option shall, immediately upon the
Optionee's cessation of Service, terminate and cease to remain outstanding
with respect to any and all shares of Common Stock for which the option is
not otherwise at that time exercisable.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over while the
Optionee remains in Service, each outstanding option shall automatically
accelerate so that each such option shall, immediately prior to the
effective date of the Change in Control or Hostile Take-Over, become fully
exercisable with respect to the total number of shares of Common Stock at
the time subject to such option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock. Each such option
accelerated in connection with a Change in Control shall terminate upon the
Change in Control, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and
effect pursuant to the terms of the Change in Control. Each such option
accelerated in connection with a Hostile Take-Over shall remain exercisable
until the expiration or sooner termination of the option term.
<PAGE>
B. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his
or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of
(i) the Option Surrender Value of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is
otherwise at the time vested in those shares) over (ii) the aggregate
exercise price payable for such shares. Such cash distribution shall be
paid within five (5) days following the surrender of the option to the
Corporation.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for options
made under the Discretionary Option Grant Program.
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
- --------------------------------------------------------------------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening options.
Shares of Common Stock may also be issued under the Stock Issuance Program
pursuant to share right awards which entitle the recipients to receive those
shares upon the attainment of designated performance goals or Service
requirements. Each such award shall be evidenced by one or more documents
which comply with the terms specified below.
A. Purchase Price.
1. The purchase price per share of Common Stock subject to direct
issuance shall be fixed by the Plan Administrator.
2. Subject to the provisions of Section II of Article Seven, shares of
Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent or
Subsidiary).
<PAGE>
B. Vesting/Issuance Provisions.
1. The Plan Administrator may issue shares of Common Stock which are
fully and immediately vested upon issuance or which are to vest in one or
more installments over the Participant's period of Service or upon
attainment of specified performance objectives. Alternatively, the Plan
Administrator may issue share right awards which shall entitle the
recipient to receive a specified number of vested shares of Common Stock
upon the attainment of one or more performance goals or Service
requirements established by the Plan Administrator.
2. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her
unvested shares of Common Stock by reason of any stock dividend, stock
split, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the
same vesting requirements applicable to the Participant's unvested shares
of Common Stock and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. The Participant shall have full stockholder rights with respect to
the issued shares of Common Stock, whether or not the Participant's
interest in those shares is vested. Accordingly, the Participant shall
have the right to vote such shares and to receive any regular cash
dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding one
or more unvested shares of Common Stock, or should the performance
objectives not be attained with respect to one or more such unvested
shares of Common Stock, then those shares shall be immediately
surrendered to the Corporation for cancellation, and the Participant
shall have no further stockholder rights with respect to those shares.
To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including
the Participant's purchase-money indebtedness), the Corporation shall
repay to the Participant the cash consideration paid for the surrendered
shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to the surrendered
shares.
5. The Plan Administrator may waive the surrender and cancellation of
one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the cessation of
the Participant's Service or the non-attainment of the performance
objectives applicable to those shares. Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of Common
Stock as to which the waiver applies. Such waiver may be effected at any
time, whether before or after the Participant's cessation of Service or
the attainment or non-attainment of the applicable performance
objectives.
<PAGE>
6. Outstanding share right awards shall automatically terminate, and
no shares of Common Stock shall actually be issued in satisfaction of
those awards, if the performance goals or Service requirements
established for such awards are not attained. The Plan Administrator,
however, shall have the authority to issue shares of Common Stock in
satisfaction of one or more outstanding share right awards as to which
the designated performance goals or Service requirements are not
attained.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. All of the Corporation's outstanding repurchase rights shall terminate
automatically, and all the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any
Change in Control, except to the extent (i) those repurchase rights are
assigned to the successor corporation (or parent thereof) or otherwise
continue in full force and effect pursuant to the terms of the Change in
Control or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is
issued.
B. The Plan Administrator may at any time provide for the automatic
termination of one or more of those outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those terminated
rights upon (i) a Change in Control or Hostile Take-Over or (ii) an
InvoluntaryTermination of the Participant's Service within a designated
period (not to exceed eighteen (18) months) following the effective date of
any Change in Control or Hostile Take-Over in which those repurchase rights
are assigned to the successor corporation (or parent thereof) or otherwise
continue in full force and effect.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.
<PAGE>
ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
- --------------------------------------------------------------------------------
I. OPTION TERMS
A. Grant Dates. Options shall be made on the dates specified below:
1. Each individual serving as a non-employee Board member on January 1,
1999 shall automatically be granted at that time a Non-Statutory Option to
purchase 50,000 shares of Common Stock, provided that individual has not
previously been in the employ of the Corporation or any Parent or
Subsidiary.
2. Each individual who is first elected or appointed as a non- employee
Board member at any time after January 1, 1999 shall automatically be
granted, on the date of such initial election or appointment, a Non-
Statutory Option to purchase 50,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.
3. On the date of each Annual Stockholders Meeting held after January 1,
1999, each individual who is to continue to serve as a non-employee Board
member, whether or not that individual is standing for re-election to the
Board, shall automatically be granted a Non-Statutory Option to purchase
5,000 shares of Common Stock, provided such individual has served as a non-
employee Board member for at least six (6) months.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to
the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be
made on the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years measured
from the option grant date.
D. Exercise and Vesting of Options. Each option shall immediately
exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's
cessation of Board service prior to vesting in those shares. Each initial
50,000 share option shall vest, and the Corporation's
<PAGE>
repurchase right shall lapse, in a series of three (3) successive equal
annual installments upon the Optionee's completion of each year of Board
service over the three (3)-year period measured from the grant date.
Each annual 5,000 share option shall vest, and the Corporation's
repurchase right shall lapse, upon the Optionee's completion of one (1)
year of Board service measured from the grant date.
E. Cessation of Board Service. The following provisions shall govern the
exercise of any options outstanding at the time of the Optionee's
cessation of Board service:
(i) Any option outstanding at the time of the Optionee's cessation
of Board service for any reason shall remain exercisable for a twelve
(12)-month period following the date of such cessation of Board
service, but in no event shall such option be exercisable after the
expiration of the option term.
(ii) Any option exercisable in whole or in part by the Optionee at
the time of death may be subsequently exercised by his or her
Beneficiary.
(iii) Following the Optionee's cessation of Board service, the
option may not be exercised in the aggregate for more than the number
of shares in which the Optionee was vested on the date of such
cessation of Board service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding for any
vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Board
service, terminate and cease to be outstanding for any and all shares
in which the Optionee is not otherwise at that time vested.
(iv) However, should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability, then all shares at the time
subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation
of Board service, be exercised for all or any portion of those shares
as fully-vested shares of Common Stock.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over, the shares of
Common Stock at the time subject to each outstanding option but not
otherwise vested shall automatically vest in full so that each such option
may, immediately prior to the effective date of such Change in Control the
Hostile Take-Over, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock. Each such option accelerated in
connection with a Change in Control shall
<PAGE>
terminate upon the Change in Control, except to the extent assumed by
the successor corporation (or parent thereof) or otherwise continued in
full force and effect pursuant to the terms of the Change in Control.
Each such option accelerated in connection with a Hostile Take-Over
shall remain exercisable until the expiration or sooner termination of
the option term.
B. All outstanding repurchase rights shall also terminate automatically, and
the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control or Hostile
Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his
or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of
(i) the Option Surrender Value of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is
otherwise at the time vested in those shares) over (ii) the aggregate
exercise price payable for such shares. Such cash distribution shall be
paid within five (5) days following the surrender of the option to the
Corporation.
D. Each option which is assumed in connection with a Change in Control shall
be appropriately adjusted to apply to the number and class of securities
which would have been issuable to the Optionee in consummation of such
Change in Control had the option been exercised immediately prior to such
Change in Control. Appropriate adjustments shall also be made to the
exercise rice payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the
same.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option Grant
Program shall be the same as the terms in effect for options made under the
Discretionary Option Grant Program.
ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
- --------------------------------------------------------------------------------
I. OPTION GRANTS
The Board shall have the sole and exclusive authority to implement the
Director Fee Option Grant Program as of the first day of any calendar year
beginning after the Underwriting Date. Upon such implementation of the Program,
each non-employee Board member may elect to apply all or any portion of the
annual retainer fee otherwise
<PAGE>
payable in cash for his or her service on the Board to the acquisition of a
special option grant under this Director Fee Option Grant Program. Such
election must be filed with the Corporation's Chief Financial Officer prior
to the first day of the calendar year for which the election is to be in
effect. Each non-employee Board member who files such a timely election
shall automatically be granted an option under this Director Fee Option Grant
Program on the first trading day in January in the calendar year for which
the annual retainer fee which is the subject of that election would otherwise
be payable.
II. OPTION TERMS
Each option shall be a Non-Statutory Option governed by the terms and
conditions specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-third
percent (33-1/3%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall become immediately due upon exercise of the
option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock subject to
the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject to
the non-employee Board member's election, and
B is the Fair Market Value per share of Common Stock on
the option grant date.
C. Exercise and Term of Options. The option shall become exercisable in a
series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each month of Board service during the calendar
year in which the option is granted. Each option shall have a maximum term
of ten (10) years measured from the option grant date.
<PAGE>
D. Termination of Board Service. Should the Optionee cease service for any
reason (other than death or Permanent Disability) while one or more of his
or her options are outstanding, then each such option shall remain
exercisable, for any or all of the shares for which the option is
exercisable at the time of such cessation of Board service, until the
earlier of (i) expiration of the option term or (ii) the expiration of the
three (3)-year period measured from the date of such cessation of Board
service. However, each such option outstanding at the time of such
cessation of Board service shall immediately terminate and cease to remain
outstanding with respect to any and all shares of Common Stock for which
the option is not otherwise at that time exercisable.
E. Death or Permanent Disability. Should the Optionee's service as a Board
member cease by reason of death or Permanent Disability, then each of the
Optionee's outstanding options shall immediately become exercisable for all
the shares of Common Stock at the time subject to that option, and the
option may be exercised for any or all of those shares as fully-vested
shares until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the
date of such cessation of Board service. To the extent the option is held
by the Optionee at the time of his or her death, the option may be
exercised by his or her Beneficiary.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over while the
Optionee remains in Board service, each outstanding option shall
automatically accelerate so that each such option shall, immediately
prior to the effective date of the Change in Control or Hostile
Take-Over, become fully exercisable with respect to the total number of
shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of
Common Stock. Each such option accelerated in connection with a Change
in Control shall terminate upon the Change in Control, except to the
extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the
terms of the Change in Control. Each such option accelerated in
connection with a Hostile Take-Over shall remain exercisable until the
expiration or sooner termination of the option term.
<PAGE>
B. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his
or her outstanding options. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of
(i) the Option Surrender Value of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is
otherwise at the time vested in those shares) over (ii) the aggregate
exercise price payable for such shares. Such cash distribution shall be
paid within five (5) days following the surrender of the option to the
Corporation.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director Fee Option
Grant Program shall be the same as the terms in effect for options made under
the Discretionary Option Grant Program.
<PAGE>
ARTICLE SEVEN
MISCELLANEOUS
- --------------------------------------------------------------------------------
I. NO IMPAIRMENT OF AUTHORITY
Outstanding awards shall in no way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
II. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay the
option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon the
exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state
and local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all holders
of Non-Statutory Options or unvested shares of Common Stock under the Plan
with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by such holders in connection with the exercise of
their options or the vesting of their shares. Such right may be provided
to any such holder in either or both of the following formats:
Stock Withholding: The election to have the Corporation withhold,
from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion
of those shares with an aggregate Fair Market Value equal to the
percentage of the Taxes (not to exceed one hundred percent (100%))
designated by the holder.
<PAGE>
Stock Delivery: The election to deliver to the Corporation, at the
time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such holder (other
than in connection with the option exercise or share vesting
triggering the Taxes) with an aggregate Fair Market Value equal to the
percentage of the Taxes (not to exceed one hundred percent (100%))
designated by the holder.
IV. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately upon the Plan Effective Date.
However, the Salary Investment Option Grant Program and Director Fee Option
Grant Program shall not be implemented until such time as the Primary
Committee or the Board may deem appropriate. Options may be granted under
the Discretionary Option Grant or Automatic Option Grant Program at any
time on or after the Plan Effective Date. However, no options granted
under the Plan may be exercised, and no shares shall be issued under the
Plan, until the Plan is approved by the Corporation's stockholders. If
such stockholder approval is not obtained within twelve (12) months after
the Plan Effective Date, then all options previously granted under this
Plan shall terminate and cease to be outstanding, and no further options
shall be granted and no shares shall be issued under the Plan.
B. The Plan shall terminate upon the earliest of (i) December 4, 2008 (ii) the
date on which all shares available for issuance under the Plan shall have
been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such grants or issuances.
V. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to amend or
modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect
to stock options or unvested stock issuances at the time outstanding under
the Plan unless the Optionee or the Participant consents to such amendment
or modification. In addition, certain amendments may require stockholder
approval pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant and Salary Investment Option Grant Programs and
<PAGE>
shares of Common Stock may be issued under the Stock Issuance Program that
are in each instance in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under
those programs shall be held in escrow until there is obtained stockholder
approval of an amendment sufficiently increasing the number of shares of
Common Stock available for issuance under the Plan. If such stockholder
approval is not obtained within twelve (12) months after the date the first
such excess issuances are made, then (i) any unexercised options granted on
the basis of such excess shares shall terminate and cease to be outstanding
and (ii) the Corporation shall promptly refund to the Optionees and the
Participants the exercise or purchase price paid for any excess shares
issued under the Plan and held in escrow, together with interest (at the
applicable Short Term Federal Rate) for the period the shares were held in
escrow, and such shares shall thereupon be automatically cancelled and
cease to be outstanding.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option under the
Plan and the issuance of any shares of Common Stock (i) upon the exercise
of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
stock options granted under it and the shares of Common Stock issued
pursuant to it.
B. No shares of Common Stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq SmallCap or other Market,
if applicable) on which Common Stock is then listed for trading. Each
optionee must agree that, unless registered under the Securities Act of
1933, as amended (the "Act"), the shares issuable on exercise of an option
will bear an appropriate restrictive legend under the Act and stop transfer
instructions will be placed against the transfer of the shares.
<PAGE>
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining such person) or of the Optionee or
the Participant, which rights are hereby expressly reserved by each, to
terminate such person's Service at any time for any reason, with or without
cause.
APPENDIX
- --------------------------------------------------------------------------------
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option program in
effect under the Plan.
B. Beneficiary shall mean, in the event the Plan Administrator implements a
beneficiary designation procedure, the person designated by an Optionee or
Participant, pursuant to such procedure, to succeed to such person's rights
under any outstanding awards held by him or her at the time of death. In
the absence of such designation or procedure, the Beneficiary shall be the
personal representative of the estate of the Optionee or Participant or the
person or persons to whom the award is transferred by will or the laws of
descent and distribution.
C. Board shall mean the Corporation's Board of Directors.
D. Change in Control shall mean a change in ownership or control of
Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Corporation's outstanding voting
securities immediately prior to such transaction.
(ii) any stockholder-approved transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of
<PAGE>
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board recommends such stockholders
accept.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation's common stock.
G. Corporation shall mean Suite101.com, Inc., a Delaware corporation, and its
successors.
H. Director Fee Option Grant Program shall mean the special stock grant in
effect for non-employee Board members under Article Six of the Plan.
I. Discretionary Option Grant Program shall mean the discretionary option
grant program in effect under the Plan.
J. Employee shall mean an individual who is in the employ of the Corporation
(or any Parent or Subsidiary), subject to the control and direction of the
employer entity as to both the work to be performed and the manner and
method of performance.
K. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
L. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time listed on any Stock
Exchange or is traded on the Nasdaq National Market System,
then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on
such exchange, or on the Nasdaq National Market System. If
there is no closing selling price for the Common Stock on the
date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which
such quotation exists.
(ii) If the Common Stock is at the time traded on the Nasdaq
SmallCap Market or the NASD Bulletin Board, then the Fair
Market Value shall be the closing selling price per share of
Common Stock on the date in question, as such price is
reported on the Nasdaq SmallCap Market, or if not traded on
the Nasdaq SmallCap Market, then on the NASD Bulletin Board,
or any successor system of either. If there is no closing
selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.
<PAGE>
(iii) If the Common Stock is not then listed or admitted to trading on
any securities exchange or electronic quotation system, then the
Fair Market Value shall be the average of the bid and asked
prices as reported by any other reputable quotation service, or
if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on
the most recent day (not more than thirty (30) days prior to the
date in question) for which prices have been so reported, and,
if there are no bid and asked prices reported during the thirty
(30) days prior to the date in question, the Fair Market Value
shall be determined by the Plan Administrator as if the Company
did not have a class of equity securities registered under the
1934 Act.
M. Hostile Take-Over shall mean:
(i) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept, or
(ii) a change in the composition of the Board over a period of thirty-
six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A) who were
still in office at the time the Board approved such election or nomination.
N. Incentive Option shall mean an option which satisfies the requirements of
Code Section 422.
O. Involuntary Termination shall mean the termination of the Service of any
individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a change in
his or her position with the Corporation or Parent or Subsidiary employing
the
<PAGE>
individual which materially reduces his or her duties and
responsibilities or the level of management to which he or she reports,
(B) a reduction in his or her level of compensation (including base
salary, fringe benefits and target bonus under any performance based
bonus or incentive programs) by more than fifteen percent (15%) or (C)
a relocation of such individual's place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation is
effected by the Corporation without the individual's consent.
P. Misconduct shall mean the commission of any act of fraud, or dishonesty by
the Optionee or Participant, any unauthorized use or disclosure by such
person of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any intentional wrongdoing by such person,
whether by omission or commission, which adversely affects the business or
affairs of the Corporation (or any Parent or Subsidiary) in a material
manner. This shall not limit the grounds for the dismissal or discharge of
any person in the Service of the Corporation (or any Parent or Subsidiary).
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
R. Non-Statutory Option shall mean an option not intended to satisfy
requirements of Code Section 422.
S. Option Surrender Value shall mean the Fair Market Value per share of Common
Stock on the date the option is surrendered to the Corporation or, in the
event of a Hostile Take-Over, effected through a tender offer, the highest
reported price per share of Common Stock paid by the tender offeror in
effecting such Hostile Take-Over, if greater. However, if the surrendered
option is an Incentive Option, the Option Surrender Value shall not exceed
the Fair Market Value per share.
T. Optionee shall mean any person to whom an option is granted under
Discretionary Option Grant, Salary Investment Option Grant, Automatic
Option Grant or Director Fee Option Grant Program.
U. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
V. Participant shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.
W. Permanent Disability or Permanently Disabled shall mean the inability of
the Optionee or the Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of
twelve (12) months or more. However, solely for purposes of the Automatic
Option Grant and Director Fee Option Grant Programs, Permanent Disability
or Permanently Disabled shall mean the inability of the non-employee Board
member to perform his or her usual duties as a Board member by reason of
any medically determinable physical or mental impairment
<PAGE>
expected to result in death or to be of continuous duration of twelve
(12) months or more.
X. Plan shall mean the Corporation's 1998 Stock Incentive Plan, as set forth
in this document.
Y. Plan Administrator shall mean the particular entity, whether the Primary
Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant, Salary Investment Option Grant
and Stock Issuance Programs with respect to one or more classes of eligible
persons, to the extent such entity is carrying out its administrative
functions under those programs with respect to the persons under its
jurisdiction. However, the Primary Committee shall have the plenary
authority to make all factual determinations and to construe and interpret
any and all ambiguities under the Plan to the extent such authority is not
otherwise expressly delegated to any other Plan Administrator.
Z. Plan Effective Date shall mean December 4, 1998, the date on which Plan
was adopted by the Board.
AA. Primary Committee shall mean the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to Section 16 Insiders and
to administer the Salary Investment Option Grant Program with respect to
all eligible individuals.
AB. Salary Investment Option Grant Program shall mean the salary investment
grant program in effect under the Plan.
AC. Secondary Committee shall mean a committee of one (1) or more Board members
appointed by the Board to administer the Discretionary Option Grant
andStock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.
AD. Section 16 Insider shall mean an officer or director of the Corporation
subject to the short-swing profit liabilities of Section 16 of the 1934
Act.
AE. Service shall mean the performance of services for the Corporation (or any
Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant or stock issuance.
AF. Stock Exchange shall mean either the American Stock Exchange or the New
York Stock Exchange.
AG. Stock Issuance Program shall mean the stock issuance program in effect
under the Plan.
AH. Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
<PAGE>
AI. Taxes shall mean the Federal, state and local income and employment tax
liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or
the vesting of those shares.
AJ. 10% Stockholder shall mean the owner of stock (as determined under Code
Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any
Parent or Subsidiary).
<PAGE>
EXHIBIT 5.1
WILLIAM S. CLARKE, P.A.
ATTORNEY-AT-LAW
457 NORTH HARRISON STREET - SUITE 103
PRINCETON, NEW JERSEY 08540
__________
TELEPHONE: (609) 921-3663
FAX: (609) 921-3933
March 11, 1999
Suite101.com, Inc.
1122 Mainland Street
Suite 390
Vancouver, British Columbia,
Canada V6B 5L1
Gentlemen:
I have acted as counsel for Suite101.com, Inc. (the "Company") in
connection with its Registration Statement under the Securities Act of 1933,
as amended (File No. 333-[__________]) relating to 1,200,000 shares of the
Company's Common Stock, $.001 per value (the "Stock"), issuable in connection
with the Company's 1998 Stock Incentive Plan (the "Plan").
In my capacity as counsel to you, I have examined the original,
certified, conformed photostats or xerox copies of all such agreements,
certificates of public officials, certificates of officers, representatives
of the Company and others and such other documents as I have deemed necessary
or relevant as a basis for the opinions herein expressed. In all such
examinations I have assumed the genuineness of all signatures on original and
certified documents and the conformity to original and certified documents of
all copies submitted to me as conformed, photostat or duplicate copies. As
to various questions of fact material to such opinions, I have relied upon
statements or certificates of officials and representatives of the Company
and others.
On the basis of such examination, I advise you that, in my opinion the
shares of Stock, when sold, issued and paid for in accordance with the terms
described in the Plan and options granted thereunder, will be legally issued,
fully paid and non-assessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to my firm in the prospectus
forming a part of such Registration Statement.
Very truly yours,
William S. Clarke, P.A.
By: /s/ William S. Clarke
---------------------------------------
William S. Clarke
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report, which includes an explanatory paragraph
relating to substantial doubts existing about the Company's ability to
continue as a going concern, dated March 17, 1998, relating to the
consolidated financial statements of Suite 101.com, Inc. (lka Kinetic
Ventures, Ltd.) as of December 31, 1997, and for the years ended December 31,
1997 and 1996, included in the Company's annual report on Form 10-KSB filed
with the Securities and Exchange Commission on or about April 17, 1998.
RAIMONDO PETIT GROUP
Torrence, California
March 9, 1999